Brittany Gates

Reporting video games and tech news from an entrepreneur angle

Microsoft’s Activision Blizzard Deal Under Scrutiny

microsoft's activision blizzard deal
The European Commission deepens its investigation into the Activision Blizzard acquisition because it fears the deal will reduce competition in the video game industry.

Microsoft’s Activision Blizzard deal is under scrutiny from the European Commission. In a recent post in the Mergers section the Commission states it opened an “in-depth investigation” into the acquisition.

Why The Scrutiny For Microsoft’s Activision Blizzard Deal?

According to the European Commission they are concerned “that the proposed acquisition may reduce competition in the markets for the distribution of console and personal computers (‘PCs’) video games and for PC operating systems.”

They aren’t the only group having those same concerns because many gamers and other video game companies hold them too. They believe that Microsoft could gobble up other video game companies in the future because they have the cash to do so. In turn, this would reduce the competition in the video game industry because indie and smaller game developers won’t have the cash and/or influence to gain customers.

In addition to that concern, the European Commission believes “the transaction may significantly reduce competition on the markets for the distribution of console and PC video games, including multi-game subscription services and/or cloud game streaming services, and for PC operating systems.” So they fear this deal could cause disruption for both customers and game developers regarding subscription services and/or cloud gaming. And I agree with that sentiment. Xbox’s Game Pass is quite successful, and many game developers want to get their game on the subscription service to gain a following and make money. This deal could allow Microsoft to change Game Pass to reduce the developer’s cut, or charge customers more, or both.

The European Commission Worries About The Call of Duty Franchise

The European Commission does worry that Microsoft’s Activision Blizzard deal could negatively affect the Call of Duty franchise. It states the following in its announcement: “The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in foreclosure strategies vis-à-vis Microsoft’s rival distributors of console video games, such as preventing these companies from distributing Activision Blizzard’s console video games on consoles or degrading the terms and conditions for their use of or access to these video games.”

This lines up with Sony Interactive Entertainment’s concerns about Call of Duty becoming wholly exclusive to the Xbox console. The company’s CEO, Jim Ryan, even flew out to Brussels to meet EU regulators to discuss the acquisition and his concerns with it.

What Does This Mean For The Deal?

Is Microsoft’s Activision Blizzard deal in trouble? Maybe. We knew various countries would investigate this deal because Activision Blizzard is a major AAA game developer. The only thing we can do now is wait. The European Commission has 90 days to complete their investigation and make a ruling. So we won’t know their decision until March 23, 2023.

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